By LYLE WHITWORTH, Allstate Insurance AgentThere are two different types of home insurance coverages that can be confusing.

The first, and most common, is replacement cost. The second is actual cash value.

Both of these policies cover your dwelling and contents coverage.

Replacement cost coverage is what most people typically have under their homeowner insurance policy. Replacement cost means that if your home or contents were damaged, lost or destroyed in a covered peril, the insurance company would pay to replace or repair damages with materials of similar kind and qualify without considering depreciation.

If your home was destroyed by fire and you had a two-year old flat screen television, the company would replace it with a flat screen television of equal quality.

Actual cash value is a coverage that some homeowners have for their coverage. If your home or contents were damaged in a covered period, the insurance company would cover the loss, less depreciation.

For instance, say you bought a flat screen television 10 years ago for $1,500. But if the television is only worth $200 now, that is what you would receive.

Naturally, a replacement cost policy is better for you, but because of the added coverage, the premium will usually be higher.

Hopefully this helps clear up some confusion you might have about the differences between replacement cost and actual cash value.

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